Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential merits of extending exemptions to the proposed lactose allowance for milk-based drinks to equivalent milk-substitute drinks as part of the Soft Drinks Industry Levy.

At Autumn Budget 2024 the Chancellor announced her intention to review the Soft Drinks Industry levy (SDIL) – which has incentivised producers to remove almost half (46%) the sugar in relevant drinks – to further drive product reformulation.

The ‘Strengthening the Soft Drinks Industry Levy’ consultation, published on 28 April 2025 , therefore sets out proposals to reduce the minimum sugar content threshold at which the levy applies, and to remove the current exemptions for milk-based drinks and milk substitute drinks with added sugar.

To account for the naturally occurring sugar in the milk component of these milk-based drinks, the consultation proposes the introduction of a lactose allowance. This will be calculated based upon the milk content of each drink.

The Government is also consulting on the treatment of milk substitute drinks, and proposes only to extend the SDIL to milk substitutes with added sugar. In a similar fashion to the lactose allowance, drinks with sugars only released from their principal, or ‘core’ ingredient will be out of scope of the levy.

This is to maintain consistency of treatment between milk substitute drinks and plain animal milk-based drinks, whilst bringing into SDIL milk substitutes with added sugar, including the flavoured varieties that could be consumed as alternatives to flavoured milk-based drinks. Under these proposals, if any sugars other than those from the principal ingredient are added to a milk substitute drink the SDIL thresholds will apply, based on total sugar content (g) per 100ml.